National Vulcan Engineering Insurance Group Ltd v Wade
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE ORMROD |
| Judgment Date | 27 January 1978 |
| Judgment citation (vLex) | [1978] EWCA Civ J0127-4 |
| Docket Number | Case No. 8910/76 |
| Court | Court of Appeal (Civil Division) |
| Date | 27 January 1978 |
[1978] EWCA Civ J0127-4
In The Supreme Court of Judicature
Court of Appeal
On Appeal from The Employment Appeal Tribunal
The Master of the Rolls
(Lord Denning)
Lord Justice Ormrod and
Lord Justice Geoffrey Lane
MR. MR. COLLINS, Q.C. and MR. G. WINGATE SAUL (instructed by Messrs. Gregory Rowcliffe & Co., Solicitors, London, agents for Messrs. Addleshaw Sons & Latham, Solicitors, Manchester) appeared on behalf of the Appellants.
MR. C. ROSE, Q.C. and MR. J. HAND (instructed by Brian Thompson, Esq., Solicitor, Manchester) appeared on behalf of the Respondent.
This case concerns a grading system which operates on many Government departments and business houses. Each man or woman is paid a salary in accordance with the "grade" in which he is placed. The higher his grade, the higher his salary. Within one grade there may be six "performance ratings". A Man or a woman of experience and skill may be allotted a higher percentage rating than a newcomer who is yet to learn his business. He may be in the same "grade", but he receives a higher salary because of his higher percentage rating.
The employers are the National Vulcan Engineering Insurance Group Limited, which is a big insurance company dealing with "the insurance of engineering equipment and engineering works. It employs very many clerks. It divides them into grades, starting with Grade 1 and going up to Grade 8. Grade 1 is the lowest grade in which the newcomers are placed. They start as very junior clerks. They gradually progress up through the various grades. The very best may reach Grade 8 and become a supervisor in charge of many.
Within each of those grades the clerks differ very much according to their ability and capacity. So the company allocates them performance ratings. In each grade the lowest rating is "F", which is given to the very poor performer. Then comes "E", which is given to a better performer. "C" is given to the good average performer. "B" is higher. And "A" is first class. So there are those six performance ratings within each grade: and, of course, the higher performance rating the higher the salary.
These performance ratings overlap the gradings. A person with a good performance rating in a lower grade, such as Grade 6B, may do better than a person with a low performance rating in a higher grade such as Grade 7B. To give an example, a person inGrade 6B will receive a salary of £2,301 whereas a person in Grade 7E will only get £2,223.
That is the background in which we have to apply the Equal Pay Act 1970. The object of the Act is that there should be equal pay for men and women doing like work. But that Act did not come into operation in 1970. It was amended and brought up to date by the Sex Discrimination Act 1975, and only came into force on the 29th December, 1975. In passing this statute the legislature of the United Kingdom was carrying out its duty under the Treaty of Rome, of which Article 119 says: "Each Member State shall during the first stage ensure and subsequently maintain the application of the principle that men and women should receive equal pay for equal work".
Although the statute only came into force at the end of 1975, nevertheless business and commerce had previously been given warning of its coming into operation so as to be able to make the necessary arrangements.
The Vulcan Insurance company had a grading system starting from Grade 1 and going up to Grade 8. In all the lower grades up to Grade 5 the company had for many years paid men and women equally for equal work. But in Grades 6 and 7 up to early 1975, the company had made a difference: in that the women were paid only 85 per cent of what the men received for equal work. But at the beginning of 1975 the company felt it necessary to prepare for the new Act. Accordingly, by the 1st October, 1975, they had altered their system so as to provide equal pay for men and women doing equal work. In particular in Grades 6 and 7 (where there had previously been a difference) they eliminated the difference between men and women altogether. They issued a table showing the new payments for Grade 6 and Grade 7. It showed that men andwomen in those grades would receive equal pay for equal work: but according to their performance ratings.
Now I come to the claim of Mrs. Wade. She is aged 50. She was employed as a policy clerk with the company. She had to prepare new policies of insurance, amend existing ones, calculate charges and rebates and so forth. She was assessed by the management early in January 1975 as category 6D. Her assessment was as follows: "Mrs. E.M. Wade (Grade 6D: no change). Mrs. Wade had a fair knowledge of the procedures and works quite well when concentrating, but unfortunately is easily distracted". So she was assessed as 6D.
There was a man also in the same grade as Mrs. Wade (6D.) He was Mr. I. He was getting the same salary. The assessment said of him: "Has a fair knowledge of the procedures, is willing and can be a good worker when he concentrates on the job. However he is easily distracted which results in careless mistakes".
So there it was. Mrs. Wade and Mr. I were placed on an equal footing. Both were easily distracted: both were put in the same grade (6D) and received the same salary of £2,028.
Mrs. Wade was working in a department where there were 18 policy clerks all told, all doing the same work, 14 men and 4 women. The work of all 18 was the same. Each of them was handed a bundle of papers estimated to take two hours to process, and they were expected to process them in that time. But the quality and accuracy of the work done by those 18 varied according to each individual. Some needed more supervision than others. The management made a difference in grading and rating according to the quality of each individual's performance.
We have a table of the grading of each of those 18. I am afraid that Mrs. Wade and Mr. I were the lowest graded of allthese 18 workers, 6D at £2,028. One man was graded above them at 6C: he received £2,202. One man was graded at 6B, and he received £2,301. There was one man at 7E who received £2,223. I will speak of him later: he is a Mr. McCann. Then in Grade 7D there were 5 men and one woman all getting the same, £2,334. In Grade 7C there were five men and two women, all getting £2,535
That is the table which was put before the court by the employers, showing how their grading scheme operates. It applies equally, as far as can be observed, for men and women. Indeed they put two cases before the tribunal cf a man, Mr. F, and a woman, Mrs. I, who were both in Grade 7C. The assessment of Mr. F was "has a good overall knowledge of the procedures gained through his experience, but he tends to lack confidence in his own abilities", and that Mrs. L "is one of the more experienced members of the S.A.L. section who has been useful this year in teaching other members of the staff the finer points of the various periodics done on the section".
So there it is. According to that evidence before the tribunal (which I am afraid they did not analyse as we have had it analysed before us) the employers were operating this scheme fairly and evenly according to the skills and experience of the individuals and not according to their sex.
I now come back to the Equal Pay Act. It came into operation on the 29th December, 1975. I need not read all the clauses, but an equality clause is written into contracts in that Act. Section 1(2)(a) of that Act, as amended by section 8 of the Sex Discrimination Act 1975, reads as follows: "… where the woman is employed on like work with a man in the same employment - (i), if (apart from the equality clause) any term of the woman's contract is or becomes less favourable to the woman than a termof a similar kind in the contract under which that man is employed, that term of the woman's contract shall be treated as so modified as not to be less favourable". That is when it is in like work.
Mrs. Wade claims that she was employed on like work with a man because all 18 employees were doing the sane work. On the 10th March, 1976 she applied to the Industrial Tribunal and made this claim in her own handwriting: "I claim that the work I am doing is the same as that being done by my male colleagues who are graded higher and paid more than myself. I therefore claim equal pay for equal work".
At the hearing before the tribunal on the 3rd June, 1976, on behalf of Mrs. Wade there was called a young man, Mr. McCann, who was graded higher than her and was doing like work. He was graded as Grade 73, because he had been assessed by the management "as a young man going places". He had not been employed by them as long as she, but they evidently rated his skill and ability as more than hers. He was graded at 7E, and was receiving more pay. Mrs. Wade called that young man as a witness and said that she ought to be graded as high as he was and that she ought to be receiving the same pay.
If one stopped at section 1(2) one might think Mrs Wade had a case, but the employers rely on an exception to that clause, section 1(3), which says: "An equality clause shall not operate in relation to a variation between the woman's contract and the man's contract if the employer proves that the variation is genuinely due to a material difference (other than the difference of sex) between her case and his".
That is what the employers are saying here. They say that this variation is genuinely due to the difference in the skill,capacity and experience of the individual. It has nothing to do with the sex. A better person, whether he be man or woman, is given a higher grading and more pay than a worse man or a worse woman. They say that the difference is due to the employees' skill, capacity and...
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